IR35 Q - Just Cant Seem To Get Answered

[KayMan]

Okay, this might be one of the simplest questions ever asked about I35 - but I just cannot seem to get the answer on this.

The wording about IR35 confuses me, because it always refers to "a contract" falling within IR35. My confusion therefore is that if a contract is indeed within IR35, would you go back to being out of IR35 should you no longer be under that contract?

If not, then are you then under IR35 until further notice? What about if you close your limited and open a new one?

And if it is indeed purely on a contract by contract basis, then this raises several questions:

1- If HMRC deem that one of a contractor's past contracts falls within the IR35 ruling. Does that mean that the contractor would have to backdate NI payments for just the duration of that contract?
2- If not, would that mean that the contractor would have to backdate NI payments for ALL their previous (and current) contracts?
3- Finally, if you do fall within IR35 on a current contract, and you are aware of it and the answer to Q2 is N, doesn't it then make sense to just leave that contract and go find a new one?

Sorry if these are super basic questions, I just can't seem to wrap my head around IR35 scope. Readings always seem to imply it is a permenant thing, but then HMRC say it is contract specific. I'm .

[TheCyclingProgrammer]

In short, if your contract is caught by IR35, then the income from just that contract has to be taxed appropriately. Profit from any non-IR35 contract can be retained by YourCo or distributed as dividends as normal.

[centurian]

Previous/future contracts with the same end-client, probably yes, even if there are minor differences between the clauses in the contract. Judges are not stupid - and they can spot the fact you may have toughened up the contract from an IR35 perspective. Court judgements in the past have supported this.

Different end clients, no - each contract is assessed separately. Of course, you can probably expect them all to be assessed, so the reason for failing one may apply to others as well and/or they may find other reasons to fail the other engagements.

[VectraMan]

1. Yes. 2. No. 3. Maybe.

You could have an inside IR35 contract and an outside IR35 contract at the same time. It doesn't apply to you as such; it's per contract.

[TheCyclingProgrammer]

Previous/future contracts with the same end-client, probably yes, even if there are minor differences between the clauses in the contract. Judges are not stupid - and they can spot the fact you may have toughened up the contract from an IR35 perspective. Court judgements in the past have supported this.

Different end clients, no - each contract is assessed separately. Of course, you can probably expect them all to be assessed, so the reason for failing one may apply to others as well and/or they may find other reasons to fail the other engagements.

Also worth bearing in mind a single contract can start outside IR35 (both contract and working practices) but can become caught mid-contract if you stay long enough and your working practices start to change to that of a normal employee.

[northernladuk]

Also worth bearing in mind a single contract can start outside IR35 (both contract and working practices) but can become caught mid-contract if you stay long enough and your working practices start to change to that of a normal employee.

+1 as shown in the JLJ case...

[centurian]

+1 as shown in the JLJ case...

+2 - was going to add that in my post, but got fed up after typing two paragraphs

[KayMan]

thank you guys, very helpful info, really clear the confusion on that one!

[eazy]

Working Practices

In addition to the above comments. I would add :

- The working practices need to be outside IR35 as well, contract wording is not sufficient to move you outside IR35. HMRC do not tend to accept contract wording at face value.

[VectraMan]

Also worth bearing in mind a single contract can start outside IR35 (both contract and working practices) but can become caught mid-contract if you stay long enough and your working practices start to change to that of a normal employee.

I'm an employee and my working practices are exactly the same as they were in my time as a contractor. But that's a different argument, probably.